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Kinder Morgan to Decide on the Trans Mountain Expansion

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Nov. 20 2020, Updated 2:44 p.m. ET

Kinder Morgan fell 1.1% last week

Kinder Morgan (KMI) stock fell 1.1% in the week ending May 25 and outperformed the Energy Select Sector SPDR ETF (XLE), which fell 4.5% for the week. Enterprise Products Partners (EPD) and ONEOK (OKE) fell nearly 0.5% each during the week. Crude oil prices fell 4.8% during the week. To learn more about the factors that impact crude oil prices, read Surprise Build in US Crude Oil Inventories Pressured Oil Prices.

The above graph compares Kinder Morgan with its peers and crude oil prices last week.

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Trans Mountain expansion decision

Kinder Morgan announced May 31 as the deadline for a decision on whether it will go ahead with the Trans Mountain expansion project. The company’s decision will be a key event to watch this week. A Bloomberg report suggested that the Canadian government might buy the entire project from Kinder Morgan.

While the Canadian government offered to cover any losses due to political delays in the expansion project, Kinder Morgan doesn’t seem to be convinced yet. A Kinder Morgan press release said, “While discussions are ongoing, we are not yet in alignment and will not negotiate in public.”

Analysts’ recommendations

Of the analysts surveyed by Reuters, 30% rated Kinder Morgan Canada Limited (KML.TO) as a “buy,” 60% rated it as a “hold,” and 10% rated it as a “sell.” The median target price for the stock is 17 Canadian dollars. Currently, the shares are trading at 16.82 Canadian dollars. The median target price implies an upside of 1% in a year from Kinder Morgan Canada’s current price.

Of the analysts covering Kinder Morgan, 64% recommended the stock as a “buy” and 36% recommended the stock as a “hold.” The median target price for Kinder Morgan is $21, which implies 32% upside to its current price of $15.89.

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